The credit policy of a commercial bank is an internal document of the bank, with the help of which the main approach to lending and the requirement for the borrower is determined, taking into account the current economic situation. The credit policy of commercial banks is able to express the philosophy (ordinary approach, concept) of credit work of banks, to establish the strategic basis of this activity. To solve this issue, any commercial bank conducting lending activities has certain rules for issuing credit funds.
Policy is a general guide to action in the work of credit services of banks. The credit policy of a commercial bank also has such tasks in order to minimize the inevitable commercial risks, on the one hand, and, on the other hand, to preserve the widest possible niche of potential credit product consumers.
The credit policy of a commercial bank also has a main goal - it places highly liabilities (as well as attracted deposits and deposits) of the bank in a loan product and at the same time maintains a certain level of quality of bank loan portfolios. The quality of loan portfolios is affected primarily by overdue loans and other bad debts. Overdue is a debt that has not been repaid on time, and an unfulfilled obligation of the borrower on a issued loan. Bad debt is a debt that has direct or indirect signs of a problem during servicing loans by borrowers and timely fulfillment of an obligation of borrowers to creditor banks. A quality loan is a secured loan, which is repaid on time without any problems or difficulties for the borrower.
In addition, banks must maintain reasonable balances between income and risk. It is through the development and observance of credit policy that banks strive to minimize risk, while receiving the maximum allowable operating income during this. With such actions, the credit risk of a commercial bank becomes minimal. The senior management of the bank (director or board of the bank) accepts a credit policy, and with the help of this document the authority is delegated to each executor - an employee of the credit unit. Naturally, the credit policy of commercial banks delimits decision-making, the authority to carry out a certain action, operation. The credit policy of a commercial bank develops a unified approach to lending operations, especially if there is a branch network with a credit company. In this way, an approach is established, the general principle of lending to customers of commercial banks is determined, the type of loan provided, the authority of any level of the bank to take each issue, and the operational detail of the loan procedure are determined. The requirement for this policy of banks is the conformity of credit policy to current market situations. To support the credit policy of a commercial bank, it is necessary to constantly analyze and, if necessary, refine those postulates on the basis of which it is carried out. The credit institution reviews its policy , as usual, at least once a year. In an economic situation that changes quite often, credit policies are reviewed even more often. Who, if not loan officers, every day faces a different, often non-standard case in working with a client, sees a “thin” place in politics and can make a rational proposal in order to correct it. The Bank is trying to take into account the modern life of loan strategies as close to realities as possible. It must be borne in mind that the credit policy of banks does not contradict the current laws of the state, as well as general economic development.